Quick Industry Snapshot

CarltonOne is trusted by some of the world’s most successful organizations to create and run customized recognition, rewards, incentives, loyalty, and gifting programs. Our Enterprise Engagement technology enables organizations to communicate with, equip, and engage stakeholders across multiple platforms, devices and geographies. Uniting all our platforms is Evergrow — our innovative eco-action model that turns every transaction into direct funding for tree planting and community building around the world.

Our solutions help organizations optimize multiple areas of their business:

1. The world of Incentives, Rewards, and Recognition (IRR) to promote engagement, productivity, quality, service, wellness, referrals, loyalty, and more for employees, customers, supply chain and distribution partners, and communities.
   
   
2. The emerging field of Environmental, Social, Governance (ESG), increasingly known as Stakeholder Capitalism.
   
   
3. Human Capital Management, an analytics-based approach to managing people as an asset rather than as a “sunk cost.”

IRR  

While incentives, premiums, recognition, and gifting has been around longer than anyone can remember, there was no formal industry until the early 1900s, when Premium Practice (now called Incentive, a digital magazine) was first published. Fast forward to 2023, and the Incentive Federation estimates the IRR industry to be a $90 billion business of merchandise, gift cards, and travel used for sales incentives, employee engagement, distribution partner incentives, business gifting, and fundraising auctions. 

And even though the IRR industry isn't well known, there is still an active market for incentive, recognition, and loyalty programs in Canada, the European Union, the United Kingdom, Asia Pacific, and South and Central America.

Industry players

Despite the vast market potential in IRR, there are relatively few industry leaders. In the US, the IRR industry is composed of about 100 incentive, recognition, and loyalty companies; several dozen master fulfillment companies that provide merchandise and gift cards; several dozen recognition and gifting technology companies and no more than about 3,000 promotional products distributors are active in the incentive, recognition, and safety areas.

There may be fewer than 100 additional companies worldwide.

But regardless of the number of companies, CarltonOne has solutions to support all these players and their customers.

The ESG Field

The concept of Environmental, Social, and Governance (ESG) emerged from academia in the 1980s under the terms Stakeholder Management and Stakeholder Theory, and is now widely taught in business strategy and ethics courses. The theory, first developed by Edward Freeman in 1983, a professor at the Darden Business School at the University of Virginia, has since given rise to a broad field of study of how organizations can optimize their results by considering the interests of all stakeholders — including the environment.

It is estimated that over $30 trillion worldwide is invested with ESG considerations in mind, which is putting pressure on many companies to focus on people and the environment. This is leading to a greater focus on Human Capital within organizations, the need for better design and measurement of people management processes, and enhanced internal and external reporting with prescriptive analytics to help make better decisions.

Industry players

Though an increasing number of advisory services worldwide are helping companies with ESG compliance, only a few technology firms help companies track ESG. CarltonOne is the only Enterprise Engagement platform designed to help companies address both the environmental and Human Capital aspects of their business.

Human Capital Management

Over the last few years, analytics and related technologies have made it possible to measure the return on investment (ROI) and value of Human Capital. By analyzing the relationships between revenues, costs, and the actions of customers, employees, distributors, and supply chain partners, as well as organizational wellness, safety, diversity, and inclusion, it is now possible to uncover the true value of Human Capital. This, as well as pressure from ESG investors and the European Union's and US Securities & Exchange Commission's Human Capital disclosure rules, are forcing more companies to publish Human Capital reports within their overall Corporate Sustainability reporting. You can find links to these reports at the bottom of websites for many of the world’s largest companies. More significantly, organizations are searching for data on people's behavior and using that information to better engagement with those people.

Industry players

Human Capital analytics have only just begun to affect business decision-making. As with employee surveys, companies are not always quick to act on information they collect. Nonetheless, the increasingly recognized ROI of Human Capital is encouraging companies to take a closer look at the data. The technologies of CarltonOne provide a unique combination of quantitative and qualitative data that not only give immediate insights into what is working but also help plan for the future.

The Significance of ESG and Human Capital

Due to the new focus on people in business, the IRR field is now "early stage," with enormous opportunities for growth. Only a very small percentage of organizations have a strategy for generating returns for shareholders by creating value for employees, customers, supply chain and distribution partners, communities, and the environment. Even more significantly, less than 5% of organizations by any reasonable estimates have implemented Enterprise Engagement platforms to the same extent they have CRM (customer relationship management), despite the enormous potential ROI measured by productivity, quality, sales, retention, referrals, health, safety, and more.

The ESG and Human Capital movement put a focus on people as an asset, instead of a cost, which places a far higher value on efforts to engage them than in the past. The ability to better measure and appreciate the value of Enterprise Engagement technology may lead to an increased willingness to pay for effective platforms. (CRM customers routinely pay $70 or more per seat per month, while HR tech usually costs a fraction of that fee.)

Here are the key categories in the ESG and Human Capital management movements, each of which is directly affected by engaging key stakeholders: 

Environmental

• Organizations need to comply with regulations and commit to and report on key metrics. To get the best results, they need to take action to achieve stated goals, measure and report on progress, and improve processes as needed. All of this involves communications, training, rewards, and recognition of employees that can be supported by technology.

Social

• Organizations should now be more transparent about their purpose, values, and goals and take specific actions to promote them, measure the results, continuously improve processes as needed, and produce meaningful internal and external reports.

Governance

• Organizations are facing increasing pressure from investors, suppliers, customers, and employees regarding their ethical practices and how they manage people. They must go beyond making claims and start outlining the actions they take and their results.

Human Capital Management

• The growing understanding of the link between Human Capital management and financial performance, along with pressure from investors, customers, and employees, is increasing the demand for technologies and strategies that can help enhance performance in a measurable way.

ESG, Human Capital, and Technology

In addition to running complex customized gifting, incentive, recognition, and loyalty programs, CarltonOne's Evergrow and Power2Motivate technology can support many aspects of an organization’s ESG and Human Capital reporting.

Here are the features Enterprise Engagement technology, like the applications offered by CarltonOne, provide to support ESG and Human Capital Management and reporting.

Environmental

• Communication, training, rewards, and recognition support actions employees can take to achieve organizational environmental goals.
• Actual data demonstrating the impact of employee's actions encourage further engagement in these efforts.

Social

• Better focus on a clear organizational goals and more effective alignment of communications, assessment and feedback, learning, innovation and collaboration, health and wellness, DEI (Diversity, Equity, Inclusion) loyalty, rewards, and recognition, and measurement.
• The ability to measure levels of engagement in each program through actual behaviors that can be correlated with demographics, stakeholder category, turnover, referrals, productivity, quality, and more.

Governance

• Better documentation of practices and outcomes by having all critical information about behaviors and feedback on one platform.
• Ability to see the impact of practices on stakeholders.

Human Capital Management

• Behavioral and survey-based information on the demographics of employees and their referral activities that, when correlated with financial data, allows organizations to see the return on investment of their people strategies.

Stakeholder Audiences and Engagement Tactics

A fundamental tenet of Stakeholder Management and Enterprise Engagement is a recognition that organizations can optimize performance when they foster the proactive involvement of stakeholders — employees, customers, supply chain, distribution partners, and communities. Stakeholder Management theory holds that the interests of these different audiences are interconnected in a way that is stifled by organizational silos. Enterprise Engagement technology can help break down the silos by more easily aligning the various components of engagement across audiences.

Most companies have multiple technologies or systems for managing the many ways they engage with their various stakeholders. Here are a few of the ESG and Human Capital management campaigns you can run for your audiences, many of which can be managed by Power2Motivate.

Employees

• Engagement, rewards, and recognition
• Business gifts
• Employee engagement applications, including social recognition
• Employee feedback applications
• Learning apps
• Sales incentives
• Benefits
• Wellness and safety
• Corporate Social Responsibility
• Employee Resource Groups
• Incentive travel

Customers

• Loyalty programs
• Special events
• Promotions, contests, sweepstakes
• Social media content strategies
• Advertising, e-newsletters and offers
• Digital advertising

Distribution Partners (Resellers)

• Cash and non-cash incentive programs
• Customer retreats and motivational events
• Points programs
• Slotting fees for shelf-space and SPIFFs for purchases
• Dealer loaders (an old term of merchandise or other prizes added to a shipment based on reaching a specified volume threshold)

Measuring Return on Investment

Contrary to popular belief, there are many concrete ways to measure the ROI of incentive, recognition, and loyalty programs. ROI can be measured in terms of dollars, but also in terms of non-financial goal achievement, such as participation in education programs, Corporate Social Responsibility efforts, or a demonstration of commitment to organizational values.

Here are a few quick ways to measure the quantitative or qualitative ROI of an engagement effort:

1. Establish clear quantitative and qualitative goals. The clearer the goals, the easier it is to measure the ROI. Quantitative measures track dollars or other numeric gauges like sales goals, passing a series of tests, or achieving productivity. Qualitative goals include participation in survey programs, an optional training program, or volunteer work. Try to establish simple, easily measurable goals, and limit yourself to no more than three; otherwise, it becomes hard to focus. Make sure that action and outcome measures are related and do not create administrative burdens.

2. Measure both results and actions. Don’t just measure the outcome you desire, but also focus on the different actions people need to take to achieve your goals. If you only measure outcomes, you might encourage people to cheat. By also measuring specific actions, such as making more sales presentations, you encourage people to focus on the steps to success. This approach also helps you determine which actions contribute most to success during post-program analysis.

4. Assign a value to outcomes or behaviors. Many companies offer points redeemable for rewards in their incentive, recognition, and loyalty programs. To establish the value of the points you are awarding for a specific activity, estimate the value of the action an employee completes for your organization. Is the employee's behavior worth $10 in points? You can estimate the appropriate level of appreciation by figuring what it would be worth to your department or organization if everyone took such actions in a consistent manner (like staying late to meet a customer deadline, reporting a broken rail in the warehouse that could cause an accident, achieving wellness and safety goals, referring a new customer or employee).
   
   
5. Budgeting. As a rule of thumb, many companies set aside about 2% of sales for marketing. The same rule can apply for employee engagement, where a percentage of payroll is allocated to engagement, with an important caveat. Whereas with advertising, the 2% is a fixed cost that will be spent regardless of whether the campaign increased sales; in a properly structured employee engagement process, the final cost is based on actual performance. If employees don’t hit specific goals or demonstrate desired behaviors, they may not receive any money or only a portion of that money as recognition.

Rewards Options

Organizations have a variety of options when it comes to rewarding stakeholders, including cash, merchandise, gift cards, travel, and perquisites (perks).

A general rule of thumb is to use cash for compensation and commissions employees can earn annually based on accomplishments and to use non-cash tangible rewards to express appreciation and gratitude for achievements that may not be repeatable from year to year. The purpose of non-cash rewards is to find meaningful ways to engage people that are clearly distinguished from compensation and don’t become part of your organization or client’s fixed costs.

The most important point to remember is that no reward will have optimal impact unless it’s part of a comprehensive initiative that has clear qualitative and/or quantitative goals and addresses all key levers of engagement. No matter what rewards you offer, no one will accomplish your goals unless they have the information, training, and means to achieve them.

Research consistently supports the importance of carefully selecting and presenting rewards that demonstrate an authentic understanding of the recipient. According to research published by the Incentive Research Foundation, the care put into selecting rewards is critical to optimizing long-term emotional impact. Here’s a quick checklist of the advantages and disadvantages of each reward type.

Cash

Pros:

• Recipients have a clear understanding of the value of the reward.

Cons:

• People come to expect cash rewards since they feel like compensation, so there is greater risk of “program addiction.”
• There is less organizational buzz because people don’t like to share information about compensation.

Merchandise

Pros:

• Trophy value: when properly selected, the rewards have high perceived value and create more organizational buzz, since people feel freer to talk about them.
• During inflationary times, non-cash rewards can enhance the employee experience without committing the organization to increased fixed costs.
  

Cons:

• People will push back if they feel the non-cash reward is a means of replacing compensation or if the perceived value of the reward is not consistent with the level of effort needed to achieve it.

Gift Cards

Pros:

• It is easy to select specific retailers that would appeal to the recipient.

Cons:

• Diminished trophy value: Because gift cards are denominated in dollars, some people consider them cash equivalents rather than as a memorable means of recognizing accomplishments.

Travel

Pros:

• High perceived value; based on the budget, individual travel rewards enable people to have special experiences with a significant other that otherwise might not be possible.

Cons:

• Higher costs, more logistical issues; requires time out of the office.

Perquisites (perks)

These can include special parking spaces, employee discount programs for name-brand products, health club memberships, childcare support, and more.

Pros:

• These programs generally have little to no out-of-pocket and/or low fixed costs.

Cons:

• Unless regularly communicated, people will forget these perquisites exist.